Forecast Parameters: Dependent on the Forecast Model

You can/must maintain the following parameters depending on how you carry out model selection and which model you choose. The relationship between parameters and model selection is shown in the following two tables.

Parameters Dependent on Model Selection

Model selection

Parameters

Manual model

forecast model selection

Automatic

model selection, model selection procedure

model selection

 

Parameters Dependent on the Forecast Model

Specified model/ model to be tested

Possible/required parameters

Constant model

parameter optimization

 

optimization level

 

alpha and delta factors

Constant model with optimization of the smoothing factors

-

Trend model

parameter optimization

 

optimization level

 

alpha, beta and delta factors

Moving average model

initialization periods

Weighted moving average

weighting group model

Extended forecast component used:

 

Seasonal model

parameter optimization

 

optimization level

 

alpha, beta and delta factors

Seasonal trend model

parameter optimization

 

optimization level

 

alpha, beta, gamma and

 

delta factors

2nd-order exponential smoothing model

parameter optimization

 

alpha and delta factors

2nd-order exponential smoothing model

with smoothing factor optimization

alpha and delta factors

 

Forecast model

You determine via the forecast model which model the system uses as a basis when calculating the forecast values. If you do not know the forecast model, you can have it determined by the system via automatic model selection.

Model selection

This indicator specifies for which model the system is to examine the historical values. You can specify whether the system searches the historical values

Please note that depending on the model test, a minimum number of historical values must be available. This field is significant if you do not know the model and you want the system to determine it automatically. Furthermore, you also have the possibility of pre-selecting a trend model, but at the same time instruct the system to search for a seasonal pattern and vice versa.

Selection procedure

This indicator specifies how the system is to carry out the model selection. Here, you can choose between two procedures:

Parameter optimization

Via this indicator, you can specify that the system is to optimize the necessary smoothing factors for the appropriate model. The system calculates several parameter combinations and selects the one that displays the lowest MAD. Parameter optimization is carried for the initial forecast as well as for the subsequent forecasts.

Periods per seasonal cycle

You must enter the number of periods that constitute a season here if you have selected a seasonal model or if the system is to carry out a seasonal test.

Optimization level

By determining the optimization level, you are specifying the increment with which the system is to carry out parameter optimization. The lower the increment, the more exact but also the more time consuming the optimization process will be.

Weighting group

You only have to maintain this field if you selected the forecast model, "weighted moving average". This key specifies how many historical values are taken into account for the forecast and how these values are weighted in the forecast calculation.

The following factors are used by the system, depending on the model, for exponential smoothing. Thus, for example, only the alpha and the delta factors are required for the constant model whereas all of the smoothing factors are required for the seasonal trend model.

Alpha factor

The system uses the alpha factor for smoothing the basic value. If you do not specify an alpha factor, the system will automatically use the alpha factor 0.2.

Beta factor

The system uses the beta factor for smoothing the trend value. If you do not specify a beta factor, the system will autimatically use the beta factor 0.1.

Gamma factor

The system uses the gamma factor for smoothing the seasonal index. If you do not specify a gamma factor, the system will automatically use the gamma factor 0.3.

Delta factor

The system uses the delta factor for smoothing the mean absolute deviation and the error total. If you do not specify a delta factor, the system will automatically use the delta factor 0.3.

If you set parameter optimization, the system will overwrite the originally set smoothing factors with those which have been newly calculated by the optimization process.